Tea Party in Full Meltdown over "Boehner's Cave"

Dixie said:
The average employee working for the average company in America, cost the employer approximately $8,500 per year, in addition to their salary. Typical business models are based on a 20-25% cost of labor, so the employee would have to generate profitability of around $40,000 per year, just to pay the cost of hiring them. When you add in their actual salary or hourly pay, you can see where a typical employee has to generate a tremendous amount of revenue, to make it a profitable ROI for the employer. Now come the pinheads, clamoring for a tax increase on small business owners, which just serves as one more reason not to bother hiring someone new, because even IF you manage to get a decent ROI, the taxes are higher, so you still don't get to keep your profits. What is their incentive for hiring new employees, if the extra money they make will simply be displaced by a higher tax rate?
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The money displaced would be $800 on $25,000 according to Obama's election plan. Again, remember Joe?

Let's look at 10% of that figure. If an employee makes an additional $2500 the extra tax would be $80. If a business is running on such a small margin then there's a problem with the business. In any case, the employee is either making money for the company or they are not. There is never going to be a loss because taxes are only paid on money received. It's not a head count tax. Companies are not taxed on the employee. They are taxed on the money over and above what the employee costs.

Look at it this way. It's roughly 3% over the $250,000 level. So, let's say a company is making $250,000 and hires an additional employee. If that employee is making a profit so close to the "break-even" point where an additional 3% tax on his earnings will result in going below the "break-even" point then the employee is not bringing in sufficient money. That could be due to poor work habits or lack of demand for products. In any case, there isn't a job for that employee. A company is not going to keep an employee if the cost/benefit ratio is based on a 3% differential.

You're bringing up the same argument as Joe the Plumber and it doesn't make any sense. No company is going to hire an employee based on a 3% profit/loss margin. My goodness, the owner would be uber-stressed and dead within a year! :(
 
apple0154 said:
ginally Posted by Dixie
The average employee working for the average company in America, cost the employer approximately $8,500 per year, in addition to their salary. Typical business models are based on a 20-25% cost of labor, so the employee would have to generate profitability of around $40,000 per year, just to pay the cost of hiring them. When you add in their actual salary or hourly pay, you can see where a typical employee has to generate a tremendous amount of revenue, to make it a profitable ROI for the employer. Now come the pinheads, clamoring for a tax increase on small business owners, which just serves as one more reason not to bother hiring someone new, because even IF you manage to get a decent ROI, the taxes are higher, so you still don't get to keep your profits. What is their incentive for hiring new employees, if the extra money they make will simply be displaced by a higher tax rate?
Click to expand...

The money displaced would be $800 on $25,000 according to Obama's election plan. Again, remember Joe?

Let's look at 10% of that figure. If an employee makes an additional $2500 the extra tax would be $80. If a business is running on such a small margin then there's a problem with the business. In any case, the employee is either making money for the company or they are not. There is never going to be a loss because taxes are only paid on money received. It's not a head count tax. Companies are not taxed on the employee. They are taxed on the money over and above what the employee costs.

Look at it this way. It's roughly 3% over the $250,000 level. So, let's say a company is making $250,000 and hires an additional employee. If that employee is making a profit so close to the "break-even" point where an additional 3% tax on his earnings will result in going below the "break-even" point then the employee is not bringing in sufficient money. That could be due to poor work habits or lack of demand for products. In any case, there isn't a job for that employee. A company is not going to keep an employee if the cost/benefit ratio is based on a 3% differential.

You're bringing up the same argument as Joe the Plumber and it doesn't make any sense. No company is going to hire an employee based on a 3% profit/loss margin. My goodness, the owner would be uber-stressed and dead within a year! :(
Click to expand...

:thup: Excellent response....but I fear it will fall on deaf and willfully ignorant ears.
 
apple0154 said:
The money displaced would be $800 on $25,000 according to Obama's election plan. Again, remember Joe?

Let's look at 10% of that figure. If an employee makes an additional $2500 the extra tax would be $80. If a business is running on such a small margin then there's a problem with the business. In any case, the employee is either making money for the company or they are not. There is never going to be a loss because taxes are only paid on money received. It's not a head count tax. Companies are not taxed on the employee. They are taxed on the money over and above what the employee costs.

Look at it this way. It's roughly 3% over the $250,000 level. So, let's say a company is making $250,000 and hires an additional employee. If that employee is making a profit so close to the "break-even" point where an additional 3% tax on his earnings will result in going below the "break-even" point then the employee is not bringing in sufficient money. That could be due to poor work habits or lack of demand for products. In any case, there isn't a job for that employee. A company is not going to keep an employee if the cost/benefit ratio is based on a 3% differential.

You're bringing up the same argument as Joe the Plumber and it doesn't make any sense. No company is going to hire an employee based on a 3% profit/loss margin. My goodness, the owner would be uber-stressed and dead within a year! :(
Click to expand...

Okay, first of all, you are working on fictitious numbers, and you are analyzing everything based solely on the increase of taxes, not the overall tax burden. And you are talking about "the employee" and not the employER. When a small (or big) company hires an employee, there are a number of associated costs involved. The employer assumes responsibility for these costs as a condition of hiring the employee, they have nothing to do with how much they are actually paying the employee, but they are costs to the company, associated with that employee's benefits, insurance, pension, administration, etc. That dollar amount average is around $8.5k annually, depending on the generosity of matching contributions, and regardless of the salary being paid in addition. With the additional mandates through Obamacare, it was expected to increase 40%, to over $12k per employee, and there is still uncertainty as to whether that number may be much higher.

If it costs me $12k to pay your cost to me, you need to make me $60k in profits for my business model to work...plus, your salary. Businesses make determination on hiring, based on 'return on investment' (ROI), not on simple one-sided math like you are trying to use here. They consider the cost of hiring you, the cost of employing you, and whether your contribution will generate $X for them in realized profits. When a new 3% individual tax increase comes along, it increases their cost exponentially, it increases the amount an employee needs to be worth, for the company to employ them. Add mandates to provide family leave, insurance, potentially higher unemployment compensation... all of this adds to the cost of employing someone, and effects the company's bottom line, and the really SMART businesspeople out there, pay attention to these details.

What makes no sense, is your belief that small businesses can just take the extra 3% out of their profits and the beat goes on...they can pay the extra cost to provide health care, and it can just come out of the profits too... no big deal. Loss of productivity from employees taking family medical leaves... no problem, just more that can be taken out of the profit... right? This just isn't realistic when it comes to how businesses operate. If their budget allows $850k for employee benefits, and they are employing 100 people at $8.5k each in cost... when the cost is increased to $12k, the budget doesn't change... they still have $850k for employee benefits, they only need to employ 71 people for that. Meaning, 29 people will lose their job, and 71 will become more productive. This is what is currently happening all across America.
 
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